So far as the application of Civil Procedure Code in the arbitral proceedings is concerned, Section 19 of the said Act exempts the arbitral tribunal from the shackles of the Code as also the rules of evidence contained in the Indian Evidence Act, 1872 and empowers it to formulate its own rules of procedure. This is in conformity with the object of the 1996 Act to accord greater autonomy to the arbitral tribunal in carrying out its proceedings and minimize intervention by the civil courts as is reflective in Section 5 as well. However, once the arbitral proceedings are complete and an arbitral award is made, parties are required to proceed to the civil courts either for setting aside the award or its effective enforcement. Section 36 and Section 37 of the said Act are clear reflections of this intention. To the extent that Section 37(2) of the said Act provides for judicial intervention even during arbitral proceedings in two situations- from an order of the tribunal accepting the plea referred in sub-Section (2) or sub-Section (3) of Section 16 and granting or refusing to grant an interim measure under Section 17. Perusal of Section 36 of the said Act evinces that an arbitral award, once it attains finality, has to be enforced under the Civil Procedure Code in the same manner as if it were a decree of the court. Therefore, the argument that the present Arbitration Act completely bars applicability of the provisions of Civil Procedure Code is without merit in as much as the exclusion is limited to proceedings before an arbitral tribunal. The domain of Civil Procedure Code becomes active as soon as an application under Section 34 of the said Act is made. This is further fortified by the fact that an arbitral award has to be enforced under the Civil Procedure Code in the same manner as if it were a decree of the court.
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Delhi High Court
Mahanagar Telephone Nigam ... vs Applied Electronics Ltd. & Anr. on 28 July, 2014
1. The present is an application under Section 5 of the Limitation Act, 1963 and Order 41 Rule 22 (1) read with Section 151 of Civil Procedure Code by M/s. Applied Electronics Limited (hereinafter referred to as „applicant‟) seeking condonation of delay in filing the cross-objections in the appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996(hereinafter referred to as „the said Act‟) by MTNL (hereinafter referred to as the „non-applicant‟) against the order dated 21.08.2012 by the Learned Single Judge of this Court in OMP No. 382/2005.
2. The appeal was filed by the non-applicant on 06.03.2013 and the notice in the said appeal was issued on 08.03.2013.
3. The notice of the said appeal was served by the non-applicant in the office of the counsel for applicant on 01.07.2013 and the cross-objections by the applicant were filed before this Court on 04.09.2013.
4. It is urged in the instant application that, an associate of the counsel of the applicant received the said notice on 01.07.2013 and laboured under a wrong impression that those documents pertained to an already decided matter. Accordingly, the court clerk of the counsel simply placed those documents in the office file of OMP 382/2005 and put it in the bunch of files of decided matters. As a result of this inadvertent error, the counsel did not come to know about the service of the notice in the appeal. Thereafter on 28.07.2013 the counsel discovered through the cause list that the aforesaid appeal was listed before this Court for 29.07.2013 and he, therefore, found the notice in the Court file.
5. On 28.07.2013, the counsel contacted the applicant who instructed the counsel to appear in the matter on 29.07.2013. The matter could not be taken up on 29.07.2013 as the Division Bench did not hold Court on that date. Thereafter, the notice was transmitted to the office of the applicant in Thane, Maharashtra and the matter was discussed with the officials of the applicant which led to filing of the cross-objections. The same, as aforesaid, were filed before this Court on 04.09.2013.
6. It is, therefore, stated that there is a delay of about 34 days in filing of the cross-objections since the starting period of limitation ought to be reckoned from 01.07.2013 i.e. the date when the notice was served in the office of the counsel for the applicant.
7. The non-applicant has objected to the invocation and applicability of the provisions of cross-objections i.e. Order 41 Rule 22 of the Civil Procedure Code.
8. It is contended on behalf of the non-applicant that Section 37 of the said Act provides for filing an appeal challenging the order passed under Section 34 of the said Act. Under Order 41 Rule 22 of the Civil Procedure Code, 30 days are given to a party aggrieved by the orders passed under Section 34 to file an appeal under Section 37 of the said Act. In the present case, the said period of 30 days would run from 21.08.2012 i.e. the date of the order impugned by the applicant. The applicant was to file the application seeking condonation of delay from 20.09.2012 till the date of filing the objection petition i.e. a delay of 346 days, however, the applicant has sought condonation of delay of a period of 34 days running from the date of service of notice on him for hearing the appeal, under the garb of invoking Order 41, Rule 22 of the Civil Procedure Code.
9. It is further argued that, an appeal can be filed by an aggrieved party only under Section 37 of the said Act and provisions of Order 41 Rule 22 of Civil Procedure Code are not applicable. The Arbitration and Conciliation Act, 1996 being a complete code in itself is a special statute which specifically excludes the provisions and the applicability of the Civil Procedure Code in terms of Section 19(1) of the said Act.
10. The learned counsel for the non-applicant contends that the said Act was enacted with the object of minimizing the role of Courts in the arbitral process thereby affording expediency to the whole process of arbitration as a mode of dispute resolution. This object is incorporated in Sections 5 and 19(1) of the said Act. Reliance is placed on the case reported as Fuerst Day Lawson LTD vs. Jindal Exports Ltd.: AIR 2011 SC 2649 to point out that the said Act is a self contained code and exhaustive in itself wherein provisions of Civil Procedure Code are specifically excluded.
11. Reliance is also placed on a case reported as Jamshed Hormusji Wadia vs. Board of Trustees, Port of Mumbai and Anr.: [(2004) 3 SCC 214] wherein the Supreme Court while dealing with maintainability of cross- appeal under Article 136 of the Constitution of India has observed that the same is not maintainable and cannot be taken as an aide for condoning the delay in filing appeal. It was held in the following terms:-
"36. The exercise of appellate jurisdiction under Article 136 of the Constitution is not dependent on the provisions of Order 41 of the CPC. The Court may frame rules governing its own procedure and practice. No such rule has been framed by the Court which entitles or permits a respondent to file a cross-objection.
37. Right to file cross-objections is the exercise of substantive right of appeal conferred by law. Cross-objections partake of the right of preferring an appeal. The procedure is different and so is the rule of limitation (See, Municipal Corporation of Delhi and Ors. v. Intnl. Security & Intelligence Agency Ltd. : [2003] 1 SCR 951 and Superintending Engineer and Ors. v. B. Subha Reddy: [1999] 2 SCR 880). Against a decision by the High Court or Tribunal which is partly in favour of one and partly in favour of the other, both the parties are aggrieved and each one of them has a right to move an application in this Court seeking leave to appeal. One who does not do so and allows the prescribed period of limitation to lapse, cannot come up by way of cross- objections on the other party coming up in appeal, though we must qualify our statement of law by reference to Sri Babu Ram v. Shrimati Prasanni and Ors. : [1959]1SCR1403. In that case, in an election petition the respondent before this Court had sought to support the final conclusion of the High Court by challenging a finding recorded against her which was objected to by the appellant. This Court did not think it necessary to decide the point and observed that assuming the respondent should have preferred a petition for special leave to appeal against the finding of the High Court on the issue in question, yet the application made by the respondent for leave to urge additional grounds could be converted into a petition for special leave to appeal against the said finding, and the delay made in filing the same could be condoned. Suffice it to observe that the observation so made by this Court takes care of an unusual situation where the Court feels inclined to relax the bar of limitation by taking a sympathetic view on condoning of the delay and entertains a belated prayer ex debito justicia. We cannot close the topic without referring to Vashist Narain Sharma v. Dev Chandra and Ors. : [1955] 1 SCR 509 . It was an election appeal and the learned counsel for the respondent attempted to argue that he could support the decision of the Tribunal on other grounds which had been found against him and referred to the analogy of the Code of Civil Procedure which permits a respondent to take that course. The Court held- "that provision has no application under Article136. We have no appeal before us on behalf of the respondent and we are unable to allow that question to be re-agitated". Vashist Narain Sharma's case is a three-Judges Bench decision and though available was not placed before the Court deciding Sri Balu Ram's case, which again is a three-Judges Bench decision. Be that as it may, we are clearly of the opinion that in an appeal under Article 136 of the Constitution, the respondent cannot file cross-objections. If the judgment of the High Court was partly against the respondent, it was for it to have filed an application seeking leave to appeal. That right having been foregone by it and the period of limitation having expired, the cross-objections cannot be entertained. The filing of cross-objections by a respondent in this Court is an attempt at exercising the right of filing an application for special leave to appeal after the expiry of limitation and in a manner not contemplated by Article 136 of the Constitution. The Judgment of the High Court was delivered on 1.8.2000. Leave was granted to the appellant on 13.8.2001 in the presence of counsel for the respondent. Formal notice of lodgment of appeal was served on the respondent on 28.9.2001. The application by way of cross- objections has been filed on 31.7.2002. The only reason assigned in the application seeking condonation of delay is that though the respondent-Trust had accepted the judgment of the High Court, it was advised and persuaded to file cross- objections because of the appellants having filed the application seeking leave to file an appeal and leave having been granted to them. We do not think such explanation, in the facts and circumstances of the case, amounts to sufficient cause for condoning the delay."12. Per contra, it is argued on behalf of the applicant that the specific and implied exclusion of the Civil Procedure Code is limited to the arbitral proceedings carried on before the arbitral tribunal. Section 19 of the said Act regulates the conduct of arbitral proceedings and in that context specifies that the arbitral tribunal shall not be bound by the Civil Procedure Code or the Indian Evidence Act. Once an award is made, the Courts are required to examine if sufficient grounds exist to set aside the award under Section 34 of the said Act and make an order to that effect and thereafter if an appeal is preferred under Section 37 of the said Act, to decide the same in accordance with law.
13. Reliance is placed on the case reported as Municipal Corporation of Delhi and Ors. vs. International Security and Intelligence Agency Limited. : [(2004) 3 SCC 250], to demonstrate that the right of filing cross-objections inheres in the right to file an appeal. Relevant para(s) are reproduced below:-
"15. Right to prefer cross objection partakes of the right to prefer an appeal. When the impugned decree or order is partly in favour of one party and partly in favour of the other, one party may rest contended by his partial success with a view to giving a quietus to the litigation. However, he may like to exercise his right of appeal if he finds that the other party was not interested in burying the hatchet and proposed to keep the (sic) alive by pursuing the same before the appellate forum. He too may in such circumstances exercise his right to file appeal by taking cross objection. Thus taking any cross objection to the decree or order impugned is the exercise of right of appeal though such right is exercised in the form of taking cross objection. The substantive right is the right of appeal; the form of cross objection is a matter of procedure." "19. In Superintending Engineer and Ors. v. B. Subba Reddy (supra) a two-Judges Bench of this Court observed (vide para24) "if there is no right of cross-objection given under Section 39 of the Act, it cannot be read into Section 41 of the Act. Filing of cross objection is not procedural in nature. Section 41 of the Act merely prescribes that the procedure of the code would be applicable to the appeal under Section 39 of the Act. We are, therefore, of the opinion that cross objection by the respondent was not maintainable...." Such observation is not correct and proceeds on certain wrong premises. Firstly, form of cross objection is procedural and is only a manner of exercising right of appeal which is substantive, as we have already stated. Secondly, it is not merely the procedure prescribed by the Code of Civil Procedure which has been made applicable to proceedings under the Arbitration Act by Section 41(a) of the Act; the entire body of the Code of Civil Procedure, 1908 has been made applicable to all proceedings before the Court and to all appeals under the Arbitration Act, 1940. the provision is general and wide in its applicability which cannot be curtailed; that only exception being where (sic) provisions of the Arbitration Act and/or of rules made thereunder may be inconsistent with the provisions of the Code of Civil Procedure, 1909 in which case the applicability of the latter shall stand excluded but only to the extent of inconsistency. We may hasten to add that to the extent of our disagreement with the law laid down in B. Subba Reddy's case, the proposition appears to have been rather widely stated in that case. In fact the question before the Court in B. Subba Reddy's case was whether cross objection seeking the relief of award of interest at a higher rate was maintainable though such an order did not fall within the purview of Section 39(1) of the Act."14. With reference to applicability of the Civil Procedure Code under Section 37 of the said Act, the learned counsel for the applicant has cited the case reported as ITI vs. Siemens Ltd : AIR 2002 SC 2308. Relevant para(s) are reproduced below:-
"9. But Mr. Parasaran contended that the said order is based on an earlier reported judgment of this Court in the case of Shyam Sunder Agarwal & Co. v. Union of India [1996]1SCR245 . According to Mr. Parasaran, the Court in the case of Nirma Ltd. (supra) has erroneously founded its conclusion on the said judgment in Shyam Sunder Agarwal's case. Learned counsel argued that the case of Shyam Sunder Agarwal (supra) arose under the Arbitration Act, 1940 which Act had made the provisions of the Code specifically applicable to proceedings arising under the said Act in the civil court whereas in the present Act such provision making the Code applicable is not found. Therefore, there is a substantial difference in law between the cases of Shyam Sunder Agarwal (supra) and Nirma Ltd. (supra). Therefore, the order of this Court in Nirma Ltd. (supra) is not a good law, hence, requires reconsideration.10. We do not agree with this submission of the learned counsel. It is true in the present Act application of the Code is not specifically provided for but what is to be noted is: Is there an express prohibition against the application of the Code to a proceeding arising out of the Act before a civil court? We find no such specific exclusion of the Code in the present Act. When there is no express exclusion, we cannot by inference hold that the Code is not applicable."15. It was also contended by the applicant that in a recent case reported as Satpal P. Malhotra and Ors. vs. Puneet Malhotra and Ors. (Arbitration Appeal No.12/2010decided on 14.06.2013) the Bombay High Court has followed the decision in MCD v. International Security Inteligence Agency Ltd. (supra) and ruled that there is no bar to applying the Civil Procedure Code in proceedings of the Court under Section 37 of the said Act in the following terms:-
"90. In my view, the provisions of the Code of Civil Procedure, 1908 would apply to the arbitration proceedings filed in court to the extent, it is not inconsistent with any of the provisions of the Arbitration and Conciliation Act, 1996. There is no bar under the provisions of the Arbitration and Conciliation Act from applicability of the provisions of the Code of Civil Procedure, 1908 to the arbitration proceedings filed in court. Section 19 of the Arbitration Act provides that the Arbitral Tribunal shall not be bound by the Code of Civil Procedure, 1908. The said provision does not apply to the proceedings filed in court including arbitration application filed under section 34 or even appeal under section 37 of the Arbitration and Conciliation Act, 1996. I am thus not inclined to accept the submission of Mr. D'vitre, the learned senior counsel appearing for the appellants that right of filing cross objections also must be provided under section 37 of the Act and not having provided, cross objections would not be maintainable. In my view, section 37of the Arbitration and Conciliation Act, 1996 has to be read with the provisions of the Code of Civil Procedure, 1908 and in this case in particular Order 41 Rule 22 thereof. If arbitration appeal filed by the appellants in this court itself would not have been maintainable, cross objections filed by the respondents also in that event would not be maintainable. On perusal of Order 41 Rule 22 Sub Rule 4, it is clear that if original appeal is withdrawn or is dismissed for default, in such an event, cross objections filed by the respondents would nevertheless be heard and determined after such notice to the other parties as the court thinks fit."16. We have heard both parties and have given our anxious consideration to rival submissions. There are two core issues that require to be determined in the present case:-
I. Whether the provisions of the Code of Civil Procedure relating to cross objections can be invoked in determining the limitation period?II. If so, can the delay be condoned?17. Let us examine the relevant provisions to the present controversy. Section 34 of the said Act provides for setting aside an arbitral award and Section 37 of the said Act provides for an appeal against a determination made under Section 34 of the said Act. Section 19 of the said Act provides for the determination of rules of procedure:-
"34. Application for setting aside arbitral award.-- (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if--(a) the party making the application furnishes proof that--(i) a party was under some incapacity, or(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or(b) the Court finds that--(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or(ii) the arbitral award is in conflict with the public policy of India.Explanation. --Without prejudice to the generality of sub-clause (ii) it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81.(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx36. Enforcement.--Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court.37. Appealable orders.--(1) An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:--(a) granting or refusing to grant any measure under section 9;(b) setting aside or refusing to set aside an arbitral award under section 34.(2) An appeal shall also lie to a Court from an order granting of the arbitral tribunal.--(a) accepting the plea referred in sub-section (2) or sub- section (3) of section 16; or(b) granting or refusing to grant an interim measure under section 17.
(3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.
xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx
19. Determination of rules of procedure.-- (1) The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872).
(2) Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.
(3) Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate. (4) The power of the arbitral tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence."
18. Order 41 Rule 22 of the Civil Procedure Code deals with the procedure to file cross-objections in an appeal:-
22. Upon hearing respondent may object to decree as if he had preferred a separate appeal.-(1) Any respondent, though he may not have appealed from any part of the decree, may not only support the decree but may also state that the finding against him in the Court below in respect of any issue ought to have been in his favour; and may also take any cross-objection to the decree which he could have taken by way of appeal provided he has filed such objection in the Appellant Court within one month from the date of service on him or his pleader of notice of the day fixed for hearing the appeal, or within such further time as the Appellate Court may see fit to allow.
Explanation--A respondent aggrieved by a finding of the Court in the judgment on which the decree appealed against is based may, under this rule, file cross-objection in respect of the decree in so far as it is based on that finding, notwithstanding that by reason of the decision of the Court on any other finding which is sufficient for the decision of the suit, the decree, is, wholly or in part, in favour of that respondent.
(2) Form of objection and provisions applicable thereto-- Such cross-objection shall be in the form of a memorandum, and the provisions of rule 1, so far as they relate to the form and contents of the memorandum of appeal, shall apply thereto.
(4) Where, in any case in which any respondent has under this rule filed a memorandum of objection, the original appeal is withdrawn or is dismissed for default, the objection so filed may nevertheless be heard and determined after such notice to the other parties as the Court thinks fit.
(5) The provisions-relating to appeal by indigent persons shall, so far as they can be made applicable apply to an objection under this rule."
19. So far as the application of Civil Procedure Code in the arbitral proceedings is concerned, Section 19 of the said Act exempts the arbitral tribunal from the shackles of the Code as also the rules of evidence contained in the Indian Evidence Act, 1872 and empowers it to formulate its own rules of procedure. This is in conformity with the object of the 1996 Act to accord greater autonomy to the arbitral tribunal in carrying out its proceedings and minimize intervention by the civil courts as is reflective in Section 5 as well. However, once the arbitral proceedings are complete and an arbitral award is made, parties are required to proceed to the civil courts either for setting aside the award or its effective enforcement. Section 36 and Section 37 of the said Act are clear reflections of this intention. To the extent that Section 37(2) of the said Act provides for judicial intervention even during arbitral proceedings in two situations- from an order of the tribunal accepting the plea referred in sub-Section (2) or sub-Section (3) of Section 16 and granting or refusing to grant an interim measure under Section 17. Perusal of Section 36 of the said Act evinces that an arbitral award, once it attains finality, has to be enforced under the Civil Procedure Code in the same manner as if it were a decree of the court. Therefore, the argument that the present Arbitration Act completely bars applicability of the provisions of Civil Procedure Code is without merit in as much as the exclusion is limited to proceedings before an arbitral tribunal. The domain of Civil Procedure Code becomes active as soon as an application under Section 34 of the said Act is made. This is further fortified by the fact that an arbitral award has to be enforced under the Civil Procedure Code in the same manner as if it were a decree of the court.
20. Coming to the present controversy, Section 37 of the said Act does not prescribe the period of limitation for preferring an appeal against the order setting aside or refusing to set aside an arbitral award under Section 34 of the said Act neither does the Limitation Act. However, it stipulates that an appeal shall lie from certain orders (and from no others) to the Courtauthorized by law to hear appeals from original decrees of the Court passing the order. That would be the first court of appeal in a civil matter. Once the jurisdiction of the court stands decided by the Section, the consequential provisions applicable to such a court in deciding an appeal from an original decree shall follow as well. We agree, with the reasoning adopted by the Bombay High Court in Satpal Malhotra (supra) to the effect that Section 37 of the said Act has to be read with the provisions of the Civil Procedure Code, 1908.
21. The case of Jamshed Wadia (supra) is distinguishable on facts. The Supreme Court was dealing with a case wherein an appeal was preferred under Article 136 of the Constitution of India and evading the prescribed period of limitation, cross-objections were filed which were essentially in the nature of a leave to appeal. It is in this context that the Supreme Court has held that cross objections would not be maintainable. Therefore, the provisions of Civil Procedure Code are applicable in as much as the proceedings under Section 37 of the said Act are concerned.
22. Having decided the issue of applicability of Civil Procedure Code, we are now to look at the applicable provision to compute the period of limitation. Rule 22 Order 41 provides that the respondent may take any cross-objection to the decree which he could have taken by way of appeal provided he has filed such objection in the Appellate Court within one month from the date of service on him or his pleader of notice of the day fixed for hearing the appeal, or within such further time as the Appellate Court may see fit to allow. Therefore, the period of limitation would run from the date of 01.07.13 and not the date of the impugned order.
23. Admittedly, the respondent/applicant was served with notice of appeal on 01.07.2013 and the cross objections were filed on 04.09.2013, the delay is therefore of 34 days. The applicant having shown sufficient cause for the said delay and for the reasons recorded in the application, the delay is condoned. The application is allowed. There shall be no order as to costs.
SIDDHARTH MRIDUL, J BADAR DURREZ AHMED, J JULY 28, 2014 dn
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